The commercial banks have begun issuing passbooks and account statements to the customers every month without charging any fees, following the diktat from the Reserve Bank of India (RBI). | |
| The banks were earlier issuing quarterly account statements. A customer wanting monthly account statements had to pay anywhere between Rs 100 and Rs 250. This step is expected to increase the costs of operations of both private and foreign banks. |
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| Since March, the largest private sector bank ICICI Bank has given its customers the choice to opt for a passbook or to continue with quarterly statements of account. The bank has around 13 million account holders. |
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| "In line with Reserve Bank of India directive, we have given our customers the choice to choose between the passbook and account statement. This will increase our costs. But cost is a function of the number of customers opting for a passbook,'' said a senior ICICI Bank official. |
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| Kotak Mahindra Bank, another private sector bank, has started sending monthly statements to all its customers and also gives them the option to opt for a passbook. |
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| "Issuing monthly statements is more expensive than quarterly statements. But this also gives us the opportunity to contact customers that much more," said KVS Manian, group head, retail liabilities and branch banking, Kotak Mahindra Bank. |
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| "Less than 10 per cent of our customers visit the bank branch. Its a very small vocal minority which is demanding a passbook. Updating passbooks at branches is expected to cost the bank Rs 80 per update in the metros, while it could cost the bank Rs 40 per update in other centres,'' said a senior private sector banker. |
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| According to industry estimates, the cost of a transaction at bank branches ranges from Rs 40 to Rs 55 and hence, the banks are not encouraging customers to go back to the passbook culture. "In countries such as Europe and Singapore where banks work under a mechanised environment such as India, the system of passbooks has been discontinued,'' added a senior banker. |
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| A senior private sector banker said the cost of sending one statement is Rs 12-Rs 15. If the banks have to send statements every month, the expenditure will increase three-fold to Rs 154-Rs 180 from the current Rs 48-Rs 60 per customer. |
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| This would wipe out the gains on an account where the minimum balance of Rs 5,000 is just being maintained. Banks have a 3 per cent margin (Rs 150) on every account with a minimum balance of Rs 5,000. But this gain fades considering the facilities provided by banks. |
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| Maintaining ATMs and air-conditioned branches involves a huge cost. The cost per transaction ranges from Rs 18-Rs 24 at ATMs and Rs 40-Rs 55 at branches. |
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